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| Volume 9, Issue 9 |
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In This Issue:
 How I…revamped monday meetings
 Take your career from good to great
Ted Kennedy's leadership lessons
A Secret for Contending with Colleagues
 Three levels of persuasive conversations
 How to silence 7 common employee gripes
 Major Disconnect:[Executives Concern about Business Sustainability and
 the Actions They are Taking]
 Grave Robbers From Wall Street
 Internal Audit: The Continuous Conundrum
Cover Your Assets
New Revenue-Recognition Rules: The Apple of Apple's Eye?
The Power of [Your] Balance Sheet
Global Standards Alive and Kicking, SEC Accounting Chief Says
 Selling My Company (Again)
5 Great Credit Cards for Business
 Excessive Executive Pay: What's the Solution?
Why Competition May Not Improve Credit Rating Agencies
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How I…revamped Monday meetings
Entrepreneur Jessica Rovello tells us how she came up with an innovative way to solve a routine problem in her business.
Most employees dread those long, boring staff meetings -- but not at Arkadium.
In fact, at this developer of online flash-based games, the 35 employees at the New York office look forward to the Monday meetings. They are eager to see what will happen this week, perhaps the conference table will be used for...
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Take your career from good to great
Transform your unfulfilling career into something extraordinary using three strategies to overcome common assumptions that hold you back.
Do you ever find yourself asking, "Is this it?" Sure, you've had some successes in your career, made some money, received a promotion or two. Yet you can't help but wonder, "Is this what I am supposed to be doing with my life? Is this the limit of my contribution?" These questions are familiar territory for me. At the age of 35, I
was stuck in a career rut. Then, unexpectedly, my life turned in an extraordinary new direction. Over the course of the next 18 months, I...
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Ted Kennedy's leadership lessons
Rosabeth Moss Kanter on what managers can learn from Ted Kennedy's extraordinary career in the Senate.
Senator Edward M. Kennedy, whose loss America is mourning, was no darling of the traditional big business community. He fought for the little guy, for children, for the poor and disadvantaged, sometimes against establishments and elites. But as a leader, he was greatly admired across the political spectrum. Even those who
disagreed with his politics can draw inspiration from his life. From knowing and observing him, I choose four leadership lessons I hope executives will take to heart...
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A secret for contending with colleagues
Instead of puzzling over the behavior of others, work on changing your reaction to it, says Peter Bregman.
A few months ago my wife Eleanor came home upset after an incident with one of the parents at our daughter's school. That afternoon, when Eleanor said hello to Michelle, Michelle completely ignored her. Thinking maybe Michelle hadn't heard her, Eleanor said hello again, this time louder. Again, no response. Michelle wasn't speaking on the phone or in a conversation with another parent. She was able to respond, she just refused to. Eleanor was getting the silent treatment. Not one to give up, she said hello a third time. Finally, Michelle mumbled something without looking up and walked away. Eleanor wasn't friends with Michelle. They had only spoken a few times in the past, most notably when she called Eleanor to complain about something our daughter did. Still, she was thrown off balance by Michelle's cold shoulder. It was one of those small things that's hard to get out of your mind. She wasn't expecting it. [At this point, should you still be surprised when your boss for the 100th time doesn't invite you to a meeting? Or when you send a colleague a nice email and it goes unanswered? Again. Here's my advice:...]
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Three levels of persuasive conversations
"It is better to know some of the questions than all of the answers." —James Thurber.
It's like fingernails down a chalkboard for me. There is a Friday night gathering of the neighbors out in front of the house. The kids are all riding scooters and doing their best to imitate Tony Romo in their game of two-hand-touch football. As one of the 3-year-olds begins to pull caffeine-free sodas out of the cooler and hand them
out to the other kids, the child constantly is talking to every parent and child as he peddles his wares looking for his next customer. Here come the fingernails down the chalkboard…one of the adults makes the comment, "Boy, he sure is gonna make a great salesman someday. That boy sure can talk!" Why does everyone think the best
salesperson is always the best "talker?" It's as if that is the only skill needed to be a good salesperson. In my 18 years of experience in sales and sales management, I have not found that to be true. Some of the successful salespeople I have observed were good talkers, but oftentimes, they were not the best speakers. In fact, the
most successful salespeople I have met were not the best talkers at all. They held a much more valuable selling skill:...
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How to silence 7 common employee gripes
A recent study says that 40% of managers in the United States are considered “bad bosses” by their employees. Yet most managers assume that their relationships with their employees are running smoothly.
Obviously, some of those bosses are wrong … and that can create major problems for a business. A Gallup poll says organizations are 50% less productive—and 44% less profitable— when serious boss-employee conflicts exist. According to a new book, 30
Reasons Employees Hate Their Managers, some common employee complaints about management, plus ways managers can silence them, include:...
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Global Study: Major Disconnect Between [Executive] Leaders Concern About [their company] Sustainability and the Actions they are Taking
An overwhelming majority of corporate executives believe that sustainability-related issues are having or will soon have a material impact on their business.
Yet relatively few companies are taking decisive action to address such issues, according to a new study by MIT Sloan Management Review (MIT SMR) and The Boston Consulting Group (BCG). The study, titled The Business of Sustainability, is being released today in two publications—a detailed special report by MIT SMR and a
summary report by BCG. The findings are based on a global survey of more than 1,500 corporate executives and more than 50 in-depth interviews with experts from a range of disciplines such as energy science, civil engineering, management, and urban studies. “What came across loud and clear is...
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Grave Robbers From Wall Street
Use AIG to keep the banks out of life settlements.
Everyone on Wall Street wants to make a killing, except for the bankers at Credit Suisse and Goldman Sachs. Those guys know better than to kill when you can just wait for folks to die. The two banks are buying up life insurance policies from desperate souls who need money and bundling them into life settlement bonds. When the people
die and each soul takes its place as a twinkling basis point in the heavens, the banks will get paid. Pretty low risk, right? Not everybody makes their mortgage payments, but everybody dies. Forget about subprime, this scheme is downright subhuman, and it needs to be stopped now. Giving the banks a shot at securitizing
the $26 trillion in life insurance policies out there will drive up premiums for consumers and could potentially lead to the abusive treatment of vulnerable people. But passing a law to ban this practice is too ham-handed. Instead, let's use...
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Internal Audit: The Continuous Conundrum
A generally accepted definition of "continuous auditing" remains elusive, and expert practitioners remain rare. Here are some tips from the trenches for getting a program going.
In the latest round of the three-year standoff between Textron and the taxman, the manufacturing conglomerate is on the ropes. Federal appeals judges recently found in favor of the Internal Revenue Service, which has been seeking Textron's tax accrual papers under the assumption that the documents could lead to more information about
whether the company had improperly reported its taxable income. In the meantime, other corporations could also be on the losing side in any quest to shield the thought process behind their tax strategies from the prying eyes of legal adversaries, say attorneys. In fact, the dissenting judges in the case believe that
because of the latest ruling, the existing law for protecting documents prepared in anticipation of litigation has been thrown "into disarray" and that the majority opinion could have "wide ramifications." Among the fears:...
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Cover Your Assets
As commodity companies acquire assets, hedging can help take the caveat out of the emptor.
Forget buy low, sell high. An increasing number of commodity companies realize that their acquisition strategies need not be held hostage to economic cycles--as long as they can hedge their risk. Take Pogo Producing, a Houston-based oil and natural-gas exploration and production company. Despite soaring gas prices last year, Pogo
announced in November that it planned to acquire another oil and natural-gas concern, Noric Corp., for $630 million plus debt assumption. Or oil company Apache Corp., also in Houston, which acquired natural-gas fields in the Gulf of Mexico from Occidental Petroleum Corp. for $385 million in August, followed by a $490 million
purchase of gas reserves in the Zama region of Alberta, Canada, from Phillips Petroleum Co. in December. In each case, the growing disparity between the price of gas in the ground and the market price allowed these companies to protect their new purchases with hedges. The oil and gas business, explains Apache CFO Roger B. Plank,
is "feast or famine. Mostly famine." [Nonetheless, adds Plank, "it is a little nerve-racking if you don't know what the [market] price will be." So Plank decided to use a so- called costless collar--an increasingly popular strategy for hedging various types of risk,...]
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New Revenue-Recognition Rules: The Apple of Apple's Eye?
The computer company and other tech outfits are likely to cash in on revenue-recognition changes if the new regs take on an international flavor.
While Steve Jobs was preparing to introduce the new Apple iPod nano last week, the company's chief accountant, Betsy Rafael, was sending off a second letter to the Financial Accounting Standards Board related to revenue recognition. At issue: how FASB might rework the rules related to recognizing revenue for software that's
bundled into a product and never sold separately. The rule is especially important to Apple because it affects the revenue related to two of the company's most successful products — the iPod and the iPhone. If FASB's time line holds to form, and the rules are recast in 2011 the way Apple hopes they will be, the company could
be able to book revenue faster, yielding less time between product launches and associated revenue gains. In theory, a successful launch — and its attendant revenue — would drive up Apple's earnings, and possibly stock price, in the same quarter the product is introduced, according to several news reports that came out earlier this
week. Apple and other tech companies have been lobbying for a rewrite of the so-called multiple deliverables, or bundling, rule for quite some time. They argue that...
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The Power of [Your] Balance Sheet
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Power company Duke Energy outperformed the utility index despite a drop in sales volume and a pending regulatory approval. CFO Lynn Good preaches the virtues of a strong balance sheet during a downturn.
During the second quarter, sell-side analysts noted, the stock of Duke Energy Corp., the third-largest electric-power company in the United States, outperformed the utility index. Yet in that quarter, Duke reported flat earnings before interest and taxes compared with the same period last year, while sales volume slumped 6%. Why
does the market like Duke? Great execution of the finance strategy and a strong balance sheet, says its new CFO, Lynn Good, who was named to the position in July. As an electric-power company — with 75% of its business regulated — Duke Energy has strong cash flow, but significant capital requirements. So the challenge is raising
capital during a recession, and working to offset the recent decline in sales volume. To that end, CEO Jim Rogers and Good have announced some cost-cutting measures, and explained the company's strategy of separating its capital needs for the next five years into three buckets: committed capital, so-called ongoing
capital, and discretionary capital. According to Good, the bucket strategy keeps the company nimble. Ongoing capital, which includes...
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Global Standards Alive and Kicking, SEC Accounting Chief Says
Rather than sidetracking international financial reporting standards, the economic crisis may have underscored their importance, Kroeker says.
The roadmap to the convergence of U.S. and global accounting standards is alive and well and a Securities and Exchange Commission priority, says James Kroeker, the commission's chief accountant. The roadmap is a loose time line for the transition of U.S.-based public companies to the use of international financial reporting
standards proposed by the SEC in 2008. The effort seems to have been on hiatus since new SEC chair Mary Schapiro took the reins from Christopher Cox, who introduced the roadmap. But Thursday morning, Kroeker assured a roomful of accounting experts that the roadmap is on track. "Don't read anything into the deferral" to extend the
comment period for the time line, he said at a meeting in New York City sponsored by the New York State Society of Certified Public Accountants. The end of the comment period was extended 60 days, from February 19 to April 20, 2009, after the proposed
roadmap was released in November 2008. All told, the SEC received 200 comment letters on the pros and cons of...
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Selling my company (again)
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I thought I cashed out. But then the credit squeeze changed my plans.
Yogi Berra famously observed, while managing the New York Mets, that "it ain't over till it's over." Now I know what he meant. If you followed the saga of the sale of CitiStorage and my two other companies (see "The Offer: Parts One–11"), you probably figured -- as I did -- that I had wrapped up that particular phase of my business
career back on December 21, 2007, when Allied Capital acquired a majority stake in the business and I went from being CEO and principal owner to well-paid adviser. Well, not so fast, Kowalski. For the past six months or so, I have been working to find a new owner for the records-storage, document-destruction, and delivery
businesses I spent most of my adult life building. Along the way, I've had a front-row seat to the unfolding financial crisis, and I've seen how and why it has caused the rest of the economy to seize up. I've held off writing about the
experience out of fairness to the other parties involved, but we're now at a point where I feel I can share with you some of the lessons I've learned...
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5 Great Credit Cards for Business
In search of a credit card for your business? Here's how American Express, Capital One, CitiBusiness, and Discover stack up.
Lately, even the funding source of last resort has dried up. A year ago, business owners with credit scores of 690 or 700 could easily find a good credit card, says Curtis Arnold, CEO of CardRatings.com. Now, anyone with a score of less than 730
will have a tough time finding a reasonable interest rate. But all is not lost for the business owner in need of funds. If your credit rating is 730 or higher, there are still good cards to be found. Here are five of the best...
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Excessive Executive Pay: What's the Solution?
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"While boards have improved in recent years, the speed at which they were improving lagged behind the speed at which solutions should have been implemented." -Rakesh Khurana
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In the search for culprits in the global financial meltdown, bloated executive pay and the excessive risk-taking behavior it fueled stand out as prime suspects.
Of the two, pay dominates the headlines and provokes the most public and political outrage. Pitchfork populism over the issue reached a crescendo last March when insurance conglomerate AIG, kept on life support with up to $183 billion in taxpayers' cash, dished out bonuses totaling $165 million to 400 employees in the
London office whose derivatives trading nearly destroyed the company. Lavish pay for poor performance wasn't just an AIG phenomenon. On Wall Street, it was endemic. Bankers gave themselves nearly $20 billion in 2008 bonuses, even as the economy was spiraling downward and the government was spending billions on bailouts. Politicians
pounced...
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Why Competition May Not Improve Credit Rating Agencies
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"These findings throw some doubt on the policy that has been pursued pretty much unanimously by decision-makers in Washington, D.C. to increase competition among raters."
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In the run-up to the global financial crisis, credit rating agencies gave high marks to such risky financial vehicles as collateralized debt obligations, which few people understood.
It has been argued that these ratings misled investors as to the safety of those investments, and that this contributed to the financial turmoil that followed. This performance has come under tremendous scrutiny by lawmakers and regulators, who are debating ways to reform the ratings industry. One prominent suggestion: increased
competition. But recent research from Harvard Business School questions whether more competition is really the right medicine. "Competition in the ratings industry has been increasing, and there have been calls for yet more competition. Whether competition is likely to reduce quality or improve it has been unclear," says HBS
professor Bo Becker, an expert on bank finance and debt markets. [Becker's recent study with Todd Milbourn, a professor of finance at Washington University in St. Louis, tested the potential problem of raters that compete for business favoring the issuers and providing less reliable ratings. Their HBS working paper "Reputation and
Competition: Evidence from the Credit Rating Industry" [PDF], describes how recent increases in competition among raters led to "friendlier," poorer-quality ratings...]
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